Our most popular blog post is this one from September 30, 2014.
Right now, on June 23, 2015, farmers are looking at a pretty bleak picture so I thought it was worth an update.
By way of review, farmers must buy things to plant a crop. Seeds, chemicals, fertilizers, equipment, and labor are called non-land input costs.
According to the University of Illinois, the 2013 non-land input costs were $615 per acre. The projected number for 2014 is $588. But, as I reported in September last year, they are still going to average about $600 per acre.
By the way, land is still expensive.
Average land costs in Illinois are still increasing. The U of I reports an average cost of $290 in 2013 and a projected average of $293 in 2014. Three dollars probably doesn’t sound like a huge difference until you multiply it times 1,000 acres or 3,000 acres … but for the sake of argument and round numbers, we’ll increase the average to $290 instead of the $250 we used in September.
Based on the projected income for 2014 of $823, the average central Illinois farmer with highly productive farmland is losing $67 dollars per acre in 2014.
SO HOW MUCH DID THIS FARMER BANK?
If he’s farming 1,500 acres, he lost $100,500.
If he’s farming 1,000 acres, he lost $67,000.
If he’s farming 500 acres, he lost $33,500.
So … he’s in the red after a full year of work, toil, sweat, and stress.
2014 is what a bad year looks like.
WHAT’S A WORSE YEAR LOOK LIKE?
I made some predictions in September last year. Here there are and I think you’ll see that I came pretty close. I thought input costs and land costs would come down a little and they didn’t really. But farmers made a little more than I predicted too.
2014 Predictions (September 2014):
Total Input Costs = $575 per acre
Total Land Costs = $250 per acre
Total Expected Income = $800 per acre
Net Expected Income = -$25 per acre
It’s a sad story, but 2015 looks even worse.
The cash price today for corn is $3.30. Let’s bump that up to $3.50 just to get a really good average picture of where farmers might end up this year. I’ll also use an average yield of 190 – a little below 2013 and 2014 because of all this rain we’ve been getting.
Everything else staying the same, this farmer makes $665 per acre projected income in 2015. After he’s paid for his land and input costs, he’s losing $225 per acre.
Total Input Costs = $600 per acre
Total Land Costs = $290 per acre
Total Expected Income = $665 per acre
Net Expected Income = -$225 per acre
SO ARE FARMERS RICH?
These are the years farmers save for. Sometimes they make good money, and they reinvest that in their farms by building or repairing sheds, buying or repairing equipment, installing tile lines in their fields, and more.
Sometimes they lose big money and those good years and the investments and savings they’ve built up are all that get them through.
Are farmers rich? Not in 2014 and it’s not looking good for 2015 either.
ICGA/ICMB Marketing Manager
Source: I used this table (page 6) for my numbers and I think you’ll see that I was rather conservative, though there are many more details included here that you may want to investigate.